Danforth Donnalley Laundry Products Company Integrative Problem Assignment

Danforth Donnalley Laundry Products Company Integrative Problem - Assignment ExampleIf the company will not assume or include the $2 million rental cost, it will understate the cost of Blast, and gave an erroneous costing, and so also on the final price. This is usually done through the so-called shadow pricing method, in which the impact of any project is fully reflected in its valuation. This will also give a more precise idea of the project viability. Shadow pricing is a very useful tool in cases where there is no definite market price yet.From the standstill of the project feasibility evaluation, the hypothetical and additional cash inflows from the erosion of sales from current laundry detergent products should not at all be include in the projected cash inflows, as shown in Table 1 (Titman, Martin & Keown, 2011, p. 411). Including these cash flows gives a wrong impression that the proposed project is viable, when in fact, it might not be that feasible because from the standpoi nt of the company, there are no new cash inflows coming in (no net addition to sales revenue). In selling industry parlance this is merely a cannibalization of an existing product, or transferring monies from one pocket to the another(prenominal) pocket, to use an analogy. But on the other hand, if there is a distinct possibility that competitors will introduce a product similar to Blast, then that would impact on the project as it can introduce other factors into the equation, such as grabbing or retaining market